New York Budget Gaps Threaten Broader Economy

Heavy Reliance on Wall Street Stings the Empire State, and Sector's Realignment Could Mean Lasting Changes to Tax Base

NEW YORK -- The holes blown in New York budgets by Wall Street's meltdown could reverberate through the Northeast region and beyond, after several years in which the financial capital's strong performance helped drive national growth.

The Empire State's economy, the third-largest in the U.S. behind California and Texas, grew second-fastest among states last year. Its gross domestic product advanced 4.4%, much stronger than the 2% national average and higher than California's growth of 1.5%.